Pathways to Scaling Negative Emission Technologies

As part of the project, FfE and Guidehouse, commissioned by MVV, investigated the potential for negative emissions through CO₂ capture from biogenic sources – specifically in the context of waste-to-energy plants and biomass power plants (BECCUS: Bioenergy with Carbon Capture, Utilization or Storage).

The study shows that BECCUS is technically feasible. However, the economic conditions for profitable operation are currently lacking: the costs for CO₂ capture, transport, and storage significantly exceed the potential revenues from the sale of negative emission certificates. Against this backdrop, the study formulates concrete policy recommendations to enable the scaling of negative emission technologies in Germany.

Motivation

Even with extensive decarbonization measures, unavoidable residual emissions remain – for example, from agriculture or industrial processes – which must be offset by negative emissions. These can be achieved through the capture and storage of CO₂ emissions released during the energetic use of biomass. This process, known as BECCUS, can be implemented in biomass power plants (BMKW) or waste-to-energy facilities (TAB). (see also series of articles on Carbon Management Series of articles Carbon Management: What does carbon management mean? – FfE)

Methodology

FfE quantified the potential for negative emissions from waste-to-energy plants (TAB) and biomass power plants (BMKW) in Germany and analyzed the development of the existing financing gap.

CO₂ emission potentials from TAB and BMKW were determined on a site-specific basis using publicly available data (MaStR, E-PRTR). A bottom-up approach focusing on larger and newer facilities (≥ 3 MW, < 50 years) forms the basis for estimating the potential for negative emissions in Germany.

Building on this, a ramp up scenario for CO₂ capture was developed, taking into account both technical feasibility and the availability of transport infrastructure. Facilities with pipeline access were assumed to start later, while remote facilities were modeled to begin CO₂ capture from 2030 using alternative transport modes (e.g., rail, ship).

To assess economic viability, costs along the entire process chain – from capture to transport and storage – were analyzed in detail, including investment and operating costs, taking into account economies of scale, learning rates, and uncertainty margins.

Potential revenue sources were then considered: on the one hand, through the avoidance of certificate costs for fossil emissions, and on the other, through the sale of negative emission certificates for the biogenic share of CO₂ emissions. Two price scenarios were considered:

• A conservative base scenario for CO₂ price development in the EU emissions trading system
• An optimistic compensation scenario with higher willingness to pay for CO₂ offsetting

Comparing costs and revenues enabled the identification of the financing gap for BECCUS projects, which forms the basis for the policy recommendations developed in the study.

Results

The analysis shows that TAB and BMKW in Germany currently emit around 42 million tonnes of CO₂ annually, about two-thirds of which is of biogenic origin. With a typical capture rate of 90%, this results in a potential of around 25 million tonnes of negative emissions per year.

The modeled ramp up scenario assumes that CO₂ capture will begin in 2030 with around 12 million tonnes per year and increase to around 29 million tonnes by 2045. At the same time, the potential demand for CO₂ for CCU – such as the production of synthetic fuels – is expected to grow to around 15 million tonnes. Part of the captured biogenic CO₂ can thus be used for CCU, while the remaining share can be permanently stored to generate negative emissions.

Total costs for BECCUS – including capture, transport, and storage – vary significantly depending on location and plant size and are subject to considerable uncertainty. Figure 1 shows the cost curve for biogenic CO₂ across the entire TAB and BMKW plant portfolio in Germany. Due to economies of scale, facilities with large CO₂ capacities tend to be located further left on the cost curve. The lowest overall costs are found in facilities with short transport distances and onshore storage. Overall, costs range between €150/t and €300/t for CO₂ capture starting in 2030.

Cost development through 2045 remains uncertain. While technological learning effects may reduce investment costs, current market trends indicate rising costs in early pilot projects. To determine the financing gap, average cost estimates were compared with potential revenues from the EU Emissions Trading System. Figure 2 illustrates the resulting financing gap for a typical biomass power plant, where captured CO₂ is transported by rail to an offshore storage site.

In the baseline scenario, the average financing gap in 2030 is €134 per tonne of CO₂. Even under optimistic assumptions for revenue potentials from negative emission certificates, this gap can only be partially closed by 2045. This clearly shows: without targeted support measures, BECCUS cannot be operated economically.

The study identifies four key recommendations for policymakers:

1. Establish uniform standards: Define standards and certification systems for negative emissions.
2. Design funding to cover the entire process chain: Use Contracts for Difference in the medium term and investment grants in the short term to support first movers.
3. 3. Integrate negative emissions into the EU Emissions Trading System: Allow BECCUS operators to offer certificates on a regulated market.
4. Develop regulatory and financing frameworks for CO₂ infrastructure: Provide planning certainty and suitable financing mechanisms during the ramp-up phase.